Impact of Finances 50+ SM Training Classes on Individuals Financial Behaviors: Results and Implications sponsored by and developed in collaboration

Transcription

1 Impact of Finances 50+ SM Training Classes on Individuals Financial Behaviors: Results and Implications sponsored by and developed in collaboration with Charles Schwab Foundation

2 Elinore Robey Director of Programs, Schwab Community Services and Charles Schwab Foundation Donna V.S. Ortega Program Manager, Income Impact Area at AARP Foundation J. Michael Collins Center for Financial Security, Faculty Director, UW-Madison T. Ryan Wilson Senior Strategic Policy Advisor, AARP Public Policy Institute

3 Welcome and Introduction Elinore Robey Director of Programs, Schwab Community Services and Charles Schwab Foundation

4 Charles Schwab Foundation is a private, nonprofit organization funded by The Charles Schwab Corporation. Its mission is to create positive change through financial education, philanthropy, and volunteerism. More information is available at The Charles Schwab Foundation is classified by the IRS as a charity under section 501(c)(3) of the Internal Revenue Code. The Foundation is neither a part of Charles Schwab & Co., Inc. (member SIPC) nor its parent company, The Charles Schwab Corporation. AARP Foundation is working to win back opportunity for struggling Americans 50+ by being a force for change on the most serious issues they face today: housing, hunger, income and isolation. By coordinating responses to these issues on all four fronts at once, and supporting them with vigorous legal advocacy, the Foundation serves the unique needs of those 50+ while working with local organizations nationwide to reach more people, strengthen communities, work more efficiently and make resources go further. AARP Foundation is AARP s affiliated charity. Learn more at

5 Background and Goals Donna V.S. Ortega Program Manager, Income Impact Area at AARP Foundation

6 Background AARP Foundation Finances 50+ is a financial capability program sponsored by and developed in collaboration with Charles Schwab Foundation.

7 Structure of Finances 50+ Three 90-minute workshops delivered in-person and in sequence: 1. Where you are. Where you want to go. How to get there. (budgeting and goal-setting) 2. Taking control of credit and debt 3. Building and protecting your assets (savings and consumer protection)

8 How does it work? Assessment Celebrating Success Setting Goals Taking Action Planning

9 Program Goals Effect positive behavioral change in the target low-income older adult audience Educate, activate, and mobilize the volunteer base about particular financial education needs of low-income older adults Advance and educate the asset-building/ financial literacy field with information on the particular needs and effective ways of impacting the older adult audience

10 Methodology and Findings J. Michael Collins, Faculty Director, Center for Financial Security, University of Wisconsin-Madison

11 Methodology 11 organizations nationwide participated Survey instruments Baseline survey, 3-month survey, and 6-month survey English, Chinese, and Spanish Data collection September 2012 December 2013 Modes Baseline (Paper survey) 3-Month (Mail or Online survey) 6-Month (Mail or Online survey) Incentives

12 Methodology, cont d. Number of participants who completed a survey for each measure Number of participants included for each measure in the report Baseline Measure (Baseline survey) 3-month Measure (3-month follow-up survey) 6-month Measure (6-month follow-up survey) n=1,265 n=427 n=619 n=427 n=427 n=427

13 Study Objectives Understand current financial practices of program participants. Determine whether program participation elicits positive behavioral changes in managing one s finances.

14 Demographics Baseline Characteristics of Study Participants (n=427) % Female 78 Age Married/living with partner 31 White 46 African American 43 Household Income Less Than $35, Retired 52 H.S. degree/tech school 37 Renter 51

15 Baseline Financial Behaviors and Outlook 57% were either very or somewhat worried about financial situation 21% reported spending more than their income in the last 3 months 65% had less than $10,000 in non-retirement savings 46% had less than $10,000 in retirement savings Less than half (42%) had at least one financial goal

16 Findings Significant changes in attitude and confidence about financial issues Significant changes in financial behaviors Significant changes in state of financial wellbeing

17 Attitude and Confidence Concerning Financial Issues Question 1. How worried are you about your current financial situation?

18 Attitude and Confidence Concerning Financial Issues Very Confidence in Improving Financial Situation (n=427) Baseline 20% 6-Month 25% Somewhat 46% 45% Not very 17% 18% Not at all Don't know 6% 5% 7% 11% Question 2. How confident are you that you will improve your current financial situation?

19 Engagement in Positive Financial Behaviors (n=427) Net Change "Positive" behaviors: Baseline 6-Month Baseline to 6-Months 61% 71%* 16%* Reviewed financial account statements for accuracy Reduced spending and/or increased earnings to balance budget Prioritized debt repayment based on information about the terms, conditions, amounts, or interest rates Reviewed fees and interest for financial services & taken steps to reduce those costs 51% 62%* 22%* 40% 49%* 23%* 38% 49%* 29%* Calculated your net worth 28% 40%* 43%* Question 4. In the past 3 months, have you done any of the following? Check one response for each item. * Indicates that there are statistically significant differences between participant baseline and participant follow-up.

20 Engagement in Negative Financial Behaviors (n=427) Negative behaviors Baseline 6-Month Net Change Baseline to 6-Months Overdrawn a 18% 12%* -33%* checking or savings account Been contacted by a 23% 17%* -26%* creditor or debt collector about unpaid bills Taken out a payday 7% 4%* -43%* loan Taken out a cash advance on a credit card 6% 3%* at 3-month* -50%* at 3-month* Question 4. In the past 3 months, have you done any of the following? Check one response for each item. * Indicates that there are statistically significant differences between participant baseline and participant follow-up.

21 Improvement in Financial Well-Being: Goals Question 9. Do you currently have at least one financial goal?

22 Improvement in Financial Well-Being: Planning Question 9a. Do you currently have a written action plan to reach your financial goals?

23 Improvement in Financial Well-Being: Savings Baseline (n=427) 6-Month (n=427) I do not contribute to savings 21% Don't know/ Refused 10% Saving the same 27% Saving less now 29% Saving more now 13% I do not contribute to savings 19% Saving the same 44% Don't know/ Refused 2% Saving less now 18% Saving more now 17% Question 6. Compared to three months ago, are you currently saving less, the same, or more?

24 Improvement in Financial Well-Being: Spending Don't know/ Refused 6% Spending equal to income 37% Baseline (n=427) Spending more than income 21% Spending less than income 36% Don't know/ Refused 1% Spending equal to income 39% 6-Month (n=427) Spending more than income 14% Spending less than income 46% Question 5. In the past 3 months, would you say your household s average monthly spending was less than, more than, or about equal to your household s income?

25 Improvement in Financial Well-Being: Debt Don't know/ Refused 7% Baseline (n=427) More debt 14% Don't know/ Refused 3% 6-Month (n=427) More debt 8% Had no debt at either time 30% Less debt 17% Had no debt at either time 33% Less debt 25% About the same amount of debt 32% About the same amount of debt 31% Question. 10. Compared to three months ago, which of the following statements best describes how your total debt has changed?

26 Improvement in Financial Well-Being: Retirement Savings, Non-Retirement Savings, Household Debt % Changes in Total Amounts of Savings and Debt over Study Period Net Change: 6-Month vs. Baseline (n=427) Non-Retirement Savings 15% increased saving 21% decreased saving 64% no change in saving Retirement Savings 23% increased saving 17% decreased saving 60% no change in saving Household Debt 23% increased debt 35% decreased debt* 41% no change in debt * Indicates that there are statistically significant differences between participant baseline and participant follow-up.

27 Program Perspective: Significance of Findings on Practice Donna V.S. Ortega, Program Manager, Income Impact Area at AARP Foundation

28 Building the program Start with evaluation. Learn from others. Know your audience. Put the participant at the center. Course correct as needed.

29 Supporting behavior change Supporting behavior change = supporting action. In-class opportunities for practice. Application in real-life. Get people started. Provide ongoing support.

30 Working with older adults Adult experiential learning on steroids. Meet people where they are. Use relevant examples. Honor the knowledge they already have and supplement with what they need to know now. Peer-to-peer can help.

31 Program questions? Program website: AARP Foundation staff Chris Rutledge, Donna V.S. Ortega,

32 Policy Perspective: Significance of Findings for Policy T. Ryan Wilson, Senior Strategic Policy Advisor, AARP Public Policy Institute

33 Why is financial literacy important? The New Retirement Paradigm Self-Service Retirement Individuals make their own decisions Increasingly complex financial products Hi-cost financial products aimed at lower-income families Longer Retirement - We live longer! In 1970, 50-yr-old life expectancy was years In 2011, 50-yr-old life expectancy was 29.6 years

34 More on importance of financial literacy Several studies show financially literate households are More likely to plan for retirement More likely to save Less likely to use high cost borrowing and other financial services Older adults have more liabilities than past generations

35 Some Cautions Even well-constructed literacy programs are not foolproof Fraud and financial abuse are still problems Older households are targeted People with diminished capacity more susceptible Financial capability can be affected by age Older adults are more likely to suffer diminished capacity Financial capacity is one of the first abilities to diminish

36 Q & A

37 Thank you for attending today s webinar: Impact of Finances 50+ SM Training Classes on Individuals Financial Behaviors: Results and Implications This archived webinar and PowerPoint presentation will be available for viewing on the CFS website: Please contact Hallie Lienhardt at hebennett@wisc.edu or with questions. With program specific questions, please contact Donna V.S. Ortega, Program Manager, Income Impact Area at AARP Foundation at DVOrtega@aarp.org or